Exhibit 10.28
PATENT PURCHASE AND
LICENSE AGREEMENT
This Patent Purchase and License
Agreement (this “ Agreement ”) is made as of
March 22, 2005 by and between USA Payments, a Nevada
corporation having its principal place of business at 643 River
Oaks Parkway, San Jose, California 95134 (“ Seller
”), and Global Cash Access, Inc., a Delaware corporation
having its principal place of business at 3525 East Post Road,
Suite 120, Las Vegas, Nevada 89120 (“ Buyer
”).
Whereas
, Seller is the owner of the entire
right, title and interest in and to the Designated
Patents;
Whereas
, Buyer desires to purchase the
entire right, title and interest in and to the Designated
Patents;
Whereas
, Seller desires to sell to Buyer
the entire right, title and interest in and to the Designated
Patents, subject to the retention of a non-exclusive license under
the Designated Patents outside of the Buyer Field; and
Whereas
, the parties desire for the sale,
purchase and license contained herein to become effective upon the
satisfaction of certain conditions precedent.
Now,
Therefore , in
consideration of the representations, covenants and other terms and
conditions contained herein, the parties hereto agree as
follows:
1.
Definitions
For purposes of this Agreement,
the following terms shall have the following meanings:
1.1. “ Buyer Field ” shall mean the
gaming industry, including without limitation the business of
providing cash access services (including, without limitation, by
way of automated teller machines) to patrons of gaming
establishments. For purposes of clarification:
(a) “cash
access services,” as used in the foregoing sentence, includes
“quasi-cash” transactions whereby credit cards and
debit cards are used to purchase instruments that can be negotiated
for cash; and
(b) Buyer
Field does not include non-gaming merchant operations (including
but not limited to hotels, restaurants, retail shops, travel
agencies or car rental agencies) conducted at establishments at
which gaming activity occurs to the extent that such non-gaming
merchant operations involve the sale or provision of goods or
services other than money orders or gaming goods or services, but
Buyer Field does include such non-gaming merchant operations to the
extent that such non-gaming merchant operations (i) sell or
otherwise provide money orders or gaming goods or services, or
(ii) provide, enable, facilitate or permit ATM cash
withdrawals, credit card cash advances or debit card cash access
transactions in any establishment at which gaming activity
occurs.
1.2. “ Designated Patents ” shall mean
(a) United States Patent No. 6,081,792 entitled
“ATM and POS Terminal and Method of Use Thereof,”
(which the parties hereby acknowledge is erroneously reflected in
the records of the United States Patent and Trademark Office as
being held by “USA Payment, Inc.”) and U.S. patent
application Ser. No. 10/869754 entitled “ATM and POS
Terminal and Method of Use Thereof,” (b) any parent or
provisional patent application(s) upon which the priority of either
of the foregoing patent or patent application is based,
(c) all past, present and future divisionals, continuations,
continuations-in-part, reexaminations, substitutions, reissues,
extensions and renewals of any of the foregoing patents or patent
applications in subsection (a) or (b), (d) all foreign
counterparts of any of the foregoing patents or patent applications
in subsection (a), (b), or (c), and (e) all patents that have
issued or issue in the future (including the right to apply for
such patents) from any of the foregoing patents or patent
applications in subsection (a), (b), (c) or (d).
1.3. “ Licensed Product ” shall mean any
product or service now or hereafter made, used, sold, provided,
operated or offered by or on behalf of Seller (including any
finished product and any product used in the manufacture of another
product) that falls within the scope of, or that utilizes any
method or process which falls within the scope of, any of the
claims of any Designated Patents, or that incorporates, or is
itself, the subject invention of any Designated Patents, other than
such products and services that have historically been provided
exclusively to Buyer.
1.4. “ Subsidiary ” shall mean, with
respect to a party, any entity at least 50% of whose equity is
owned directly or indirectly by such party.
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2.
Patent Transfer
2.1 Assignment . Effective upon the Effective Date, Seller
hereby irrevocably assigns, conveys, sells, grants and transfers to
Buyer, its successors and assigns all of its rights, title and
interest of every kind and character throughout the world in and to
the Designated Patents to the full extent of its ownership or
interest therein, including, without limitation:
(a) all
rights to causes of action and remedies related thereto (including,
without limitation, the right to sue for past, present or future
infringement, misappropriation or violation of rights related to
the foregoing); and
(b) any
and all other rights and interests arising out of, in connection
with or in relation to the Designated Patents, including without
limitation the right to receive any royalties or other
consideration relating to any license or similar permission within
the Buyer Field.
2.2 Recordation; Further Assurances . The parties shall
execute and file with the United States Patent and Trademark Office
the confirmatory assignment with respect to the Designated Patents
attached hereto as Exhibit A .
2.3 Correction of Recordation Error . Seller represents and
warrants that on or prior to the date first set forth above, it has
caused to be filed with the United States Patent and Trademark
Office a request for corrective assignment to correct the name of
the original assignee of United States Patent No. 6,081,792
from “USA Payment, Inc.” to “USA Payments”
to correct the error referenced in the definition of
“Designated Patents”. Following execution of this
Agreement, Seller shall take all action at its own cost and
expense, including, without limitation, the prompt execution and
delivery of documents in recordable form, and otherwise use its
commercially reasonable best efforts to correct the error
referenced in the definition of “Designated Patents” as
may be reasonably necessary to vest, secure, perfect, protect and
enforce the rights and interests of Buyer in and to the Designated
Patents and other patents, patent applications, and related rights
assigned under Section 2.1 above. In any event, the foregoing
recording error shall be corrected to Buyer’s reasonable
satisfaction prior to the Effective Date.
2.4 Appointment . In the event that Buyer is unable, after
reasonable notice to Seller, for any reason whatsoever, to secure
Seller’s signature to any document Seller is required to
execute pursuant to this Section 2 to vest, secure, perfect,
protect or enforce the rights and interests of Buyer in and to the
Designated Patents, Seller hereby irrevocably designates and
appoints Buyer and its duly authorized officers and agents as
Seller’s agents and attorneys-in-fact, to act for and on its
behalf and instead of Seller, to execute and file any such
documents and to do all other lawfully permitted acts to further
the purposes of Section 2 with the same legal force and effect
as if executed by Seller.
2.5 Certain Conditions Precedent. The transfer of interests
in the Designated Patents in this Section 2 and the license
grant in Section 3 are subject to and conditioned upon both of
the following conditions precedent: (i) Seller obtaining the
consent or acknowledgement by a majority in interest of the lenders
under Global Cash Access, Inc.’s senior secured credit
facilities that the consummation of the transactions contemplated
by this Agreement will not constitute a breach of any provision of
or event of default under that certain Credit Agreement, dated
March 10, 2004, as amended, to which Seller is a party (the
“Credit Agreement”), and (ii) the consummation of
an underwritten initial public offering of equity securities by
Global Cash Access Holdings, Inc. pursuant to an effective
registration statement under the Securities Act of 1933, as amended
(the “IPO”). The date upon which both such conditions
are first satisfied is referred to herein as the “
Effective Date ”.
3.
License Grant-Back
3.1 License Grant . Effective upon the Effective Date, and
conditioned upon Seller’s correction of the recordation error
in accordance with Section 2.3, Buyer hereby grants to Seller
a non-exclusive, perpetual, irrevocable, fully paid up,
royalty-free, non-transferable (except as set forth in
Section 6.3), right and license under United States Patent
No. 6,081,792 and U.S. patent application Ser.
No. 10/869754 entitled “ATM and POS Terminal and Method
of Use Thereof” (including any patent that issues thereon) to
(a) make, have made, use, sell, offer to sell and import any
products and services solely for use and distribution outside of
the Buyer Field, (b) practice any methods or processes solely
outside of the Buyer Field, and (c) sublicense to third
parties the rights granted to Seller under subsections (a) and
(b) above. For purposes of clarification, Seller shall have no
right to grant any sublicenses under the Designated Patents within
the Buyer Field, and nothing contained in this Agreement shall
prohibit Buyer from granting additional licenses under the
Designated Patents in any field of use for any products or
services. Seller shall use commercially reasonable efforts to
ensure that its customers and distributors, and its
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sublicensees’ and their
respective customers and distributors, do not directly or
indirectly use such products or services to make, have made, use,
sell, offer to sell, or import any products or services in the
Buyer Field (such efforts shall include, without limitation,
contractual restrictions on use and distribution consistent with
this Agreement, and shall provide that Buyer is a third party
beneficiary for the purpose of enforcing any such contractual
restriction).
3.2 No Implied Licenses . Except as expressly set forth in
Section 3.1, Buyer grants no rights or licenses under the
Designated Patents to Seller, including, without limitation, any
implied rights or licenses that may otherwise arise out of this
Agreement or the activities of the parties hereunder.
4.
Payment
4.1 Purchase Price . Buyer shall pay to Seller by wire
transfer the sum of ten million US dollars (US$10,000,000.00)
within one (1) business day following the actual receipt by
Buyer of the proceeds of the IPO allocable to the Buyer.
4.2 Taxes . Buyer shall pay, and shall indemnify and hold
Seller harmless from, all taxes, duties and levies directly imposed
by all federal, state, local or other taxing authorities
(including, without limitation, export, sales, use, excise, and
value-added taxes) based on the transactions or payments under this
Agreement, other than taxes imposed or based on Seller’s net
income.
5.
Representations and Warranties;
Covenants
5.1 Mutual Representations and Warranties . Each party
represents and warrants that it has the power and authority to
enter into this Agreement and to perform its obligations hereunder,
that this Agreement is binding on and enforceable against the
parties in accordance with its terms, and that compliance by each
party with its obligations hereunder shall not conflict with or
result in a breach of any agreement to which such party is a party
or is otherwise bound.
5.2 Seller Representations and Warranties. Seller represents
and warrants that, as of the Effective Date:
(a) Seller
is the lawful owner of all right, title and interest in and to the
Designated Patents, and has the unrestricted right to assign such
right, title and interest to Buyer free and clear of any
encumbrances, liens, registrations or claims of any
nature.
(b) To
Seller’s knowledge, the Designated Patents are valid and
enforceable.
(c) The
Designated Patents (i) to Seller’s knowledge, are
valid,
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